Lean and Energy Assessment: Identifying Energy Savings in Lean Processes, Notas de estudo de Engenharia de Materiais

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Achieving Process Excellence

Using Less Energy

The Lean and Energy Toolkit

www.epa.gov/lean

Toolkit Format and Icons The toolkit uses icons in the page margins to help you find and follow important information in each chapter.

Key Point Identifies an important point to remember

Key Term Defines an important term or concept

New Tool Presents a technique or resource that helps capture, communicate, or apply new knowledge

How-to Steps Describes sequenced actions to implement a tool

Chapters also include one or more “To Consider” text boxes that contain questions to help you explore how the information relates to your organization.

Lean and Energy Toolkit

Table of Contents

Executive Summary ...............................................................................................................................i

Preface ...................................................................................................................................................iii

Purpose of This Toolkit....................................................................................................................iii

i

Executive Summary

Executive Summary

The U.S. Environmental Protection Agency (EPA) developed this Lean and Energy Toolkit to assist organizations in reducing energy use and improving performance through Lean manufacturing— the production system developed by Toyota. Drawing from the experiences and best practices of multiple industry and government partners, this toolkit describes practical strategies and techniques to improve energy and environmental performance while achieving Lean goals such as improved quality, reduced waste, and increased customer responsiveness.

There are at least three reasons for integrating Lean and energy efficiency efforts:

1. Cost Savings: Reducing energy costs has a significant impact on business performance, though costs may be hidden in overhead or facility accounts.
2. Climate Change and Environmental Risk: Proactively addressing the environmental and climate impacts of energy use is increasingly important to industry and society. Failure to do so is a potential business risk.
3. Competitive Advantage: Lowering recurring operating costs, improving staff morale, and responding to customer expectations for environmental performance and energy efficiency increases your competitive advantage.

Linking Lean and Energy Use

Considerable energy savings typically ride the coattails of Lean activities because of Lean’s focus on eliminating non-value added activities (waste). Without explicit consideration of energy wastes, however, Lean may overlook significant opportunities to improve performance and reduce costs. Companies such as Baxter International, Eastman Kodak, General Electric, Toyota, and 3M, as well as many smaller manufacturers, have successfully used Lean methods to reduce energy use, risks, and costs (see textbox).

Example Results From Lean and Energy Improvement Efforts

✓ A Baxter International facility saved $300,000 in energy costs in one year. ✓ General Electric has reduced greenhouse gas emissions by 250, metric tons and saved $70 million in energy costs since 2005 at facilities worldwide. ✓ Toyota Motor Manufacturing North America reduced facility energy use and greenhouse gas emissions by 30 percent per vehicle since 2000.

This toolkit describes a range of strategies for identifying Lean and energy improvement opportuni- ties and reducing energy use with Lean methods. It is not necessary to implement all the techniques in the toolkit to succeed; instead, select and adapt the approaches that make the most sense for your organization.

ii

Executive Summary

Lean and Energy Assessment Strategies

Lean and energy assessment strategies involve observing shopfloor activities to identify signs of energy waste, measuring actual energy use and costs over time, and implementing energy savings opportunities through short, focused events. Strategies described in this toolkit include:

• Energy Treasure Hunts: Conduct a three-day plant-wide assessment of energy savings op- portunities using a cross-functional team of employees.
• Value and Energy Stream Mapping: Integrate energy-use analysis into the Lean value stream mapping process to identify improvement opportunities within the context of the entire “value stream” of a product or service.
• Six Sigma: Use statistical process analysis and control tools to find and address root causes of energy wastes and variation.
• Energy Kaizen Events: Identify and implement employee ideas for saving energy and reducing wastes through rapid process improvement events.

Lean and Energy Reduction Strategies

Many energy efficiency best practices can be implemented without extensive analysis or planning. The Lean and energy reduction strategies in this toolkit describe ways to reduce energy use through Lean activities such as the following:

• Total Productive Maintenance (TPM): Incorporate energy reduction best practices into day-to-day autonomous maintenance activities to ensure that equipment and processes run smoothly and efficiently.
• Right-Sized Equipment: Replace oversized and inefficient equipment with smaller equip- ment tailored to the specific needs of manufacturing cells.
• Plant Layout and Flow: Design or rearrange plant layout to improve product flow while also reducing energy use and associated impacts.
• Standard Work, Visual Controls, and Mistake-Proofing: Sustain and support additional Lean and energy performance gains through standardized work procedures and visual signals that encourage energy conservation, and by making it easy or “mistake-proof” to be energy efficient.

Maximizing Lean and Energy Improvement Opportunities

In addition to explicitly using Lean methods to target energy wastes, facilities can take advantage of other windows of opportunity for energy savings that arise during Lean, including opportunities to install energy-efficient equipment, switch to less polluting fuel sources, and design products to use less energy. To be most effective, Lean and energy efforts should be proactive, strategic, and system- atic. Adopting an energy management system that aligns with and supports your organization’s Lean initiatives will enable your organization to achieve the greatest improvements in operational, energy, and environmental performance.

iv

Preface

and visual controls. Chapter 5 discusses additional ideas for achieving process excellence with less energy use and environmental impacts.

1

CHAPTER 1

Introduction

Benefits of Coordinating Lean and

Energy Management

Energy is a vital (and often costly) input to most production processes and value streams. By thinking explicitly about unnecessary energy use as another “deadly waste,” Lean implementers can signifi cantly reduce costs and enhance competitiveness, while also achieving environmental performance goals.

Benefi ts of Coordinating Lean & Energy Management (Box 1)

✓ Reduce operating and maintenance costs ✓ Reduce vulnerability to energy and fuel price increases ✓ Meet customer expectations ✓ Enhance productivity ✓ Improve safety ✓ Improve employee morale and commitment ✓ Improve environmental quality ✓ Reduce greenhouse gas emissions ✓ Remain below air permitting emission thresholds ✓ Increase overall profi t

Many organizations can fi nd it diffi cult to get senior managers to focus attention on energy use. En- ergy use is often viewed as a necessary support cost of doing business, and energy-effi ciency efforts can sometimes have diffi culty competing for organizational attention with other core operational needs. By linking energy management to Lean activities, energy-reduction efforts can be tied more directly to process improvement efforts that are regarded by senior managers as being vital to busi- ness success. In effect, energy improvements can ride the coattails of Lean activity while bringing signifi cant benefi ts to the organization.

3

Chapter 1: Introduction

Lean and Energy Use Reduction:

Company Cost Savings Experience (Box 2)

✓ Eastman Kodak Company (New York) conducted energy kaizen events that signifi cantly reduced energy use and resulted in overall savings of $15 mil- lion between 1999 and 2006. ✓ General Electric (Ohio) achieved cost savings of over $1 million at one facility due to fuel use reductions realized through Lean implementation. ✓ Howard Plating (Michigan) reduced energy use by 25 percent through a Lean implementation effort. ✓ Lasco Bathware (Washington) eliminated the need for a shrink-wrap oven when planning for a Lean event, reducing natural gas consumption by 12. million cubic feet and saving about $99,000. ✓ Naugatuck Glass Company (Connecticut) used Lean to cut product lead time and improve quality, while also reducing energy use by 19 percent. ✓ Steelcase Inc. (California) used Lean to improve operations, reducing fi xed utility costs (including energy) by about 90 percent.

Climate Change and Environmental Risk Reduction

The environmental and climate impacts of energy use are rapidly becoming a major issue facing industry and society. Carbon dioxide (CO 2 ), a major greenhouse gas, is emitted to the atmosphere directly when fuels are combusted on-site and indirectly when electricity is consumed (particularly when fossil fuels are used to generate the electricity). Identifying and eliminating energy waste during Lean offers a smart, efficient way to reduce greenhouse gas emissions. As pressures increase for limits on greenhouse gases, documented early action by businesses can reduce business risk and contribute to reduction targets. In the meantime, publicly held businesses are fi nding that failure to proactively reduce climate risk can result in shareholder resolutions to force action.^2

Energy use can have signifi cant environmental impacts and risks in addition to climate change. On- site combustion of fuels in boilers, ovens, vehicles, and equipment can emit a variety of regulated pollutants, including carbon monoxide (CO), sulfur dioxide (SO 2 ), nitrogen oxide (NOx ), particulate matter (PM), volatile organic compounds (VOCs), and a variety of air toxics. Combustion pollut- ant emissions can affect worker health, and trigger the need for costly permitting, monitoring, and emission controls. More broadly, reducing air emissions from combustion activities can help protect neighboring communities and public health. Storage and handling of fuels also pose a variety of worker health, safety, and environmental costs and risks, even in the absence of spills. Lean efforts can directly target and mitigate these impacts and risks.

(^2) See the Investor Network on Climate Risk (www.incr.com) for current information on investor and shareholder initiatives related to climate change.

4

Chapter 1: Introduction

Competitive Advantage

Identifying and eliminating energy waste through Lean can improve a company’s ability to compete in several ways. First, reducing the energy intensity of production activities and support processes directly lowers recurring operating costs with direct bottom line and competitiveness impacts. A re- cent study by the NAM and the Manufacturers Alliance (MAPI) found that U.S. companies have a 22 percent unit-cost disadvantage compared with overseas competitors in a number of process support cost areas, including energy.^3

Second, eliminating energy waste and the associated environmental impacts through Lean can foster competitive advantage for some businesses. Customers and employees may view proactive environmental improvement efforts as an important attribute, affecting customer loyalty and the ability to attract and retain employees. Participation in climate partnership programs, such as EPA’s Climate Leaders or local climate initiatives, can also provide businesses with public recognition for their energy use reduction achievements. For businesses that manufacture appliances, electronics, and other products that consume energy, Lean design methods can be used to lower the lifetime energy use of products.

It is not surprising that most of the major companies that have received awards from the EPA and Department of Energy’s ENERGY STAR Program—companies such as 3M, Eastman Kodak, and Toyota—are also leaders in implementing Lean and Six Sigma. Energy waste is clearly on the radar of leading Lean companies. In addition, ENERGY STAR certification for energy-effi cient products is an increasingly important factor in consumer-purchase decisions. For more information on EN- ERGY STAR, see www.energystar.gov.

Lean and Energy at Toyota (Box 3)

✓ Toyota, the model for “Lean” production systems at companies worldwide, is also a leader in energy and environmental performance.^4 ✓ Since 2000, Toyota Motor Manufacturing North America has reduced the average facility energy consumption per vehicle produced by 30 percent, resulting in a corresponding reduction in the CO 2 emissions of its facilities. ✓ In fi scal year 2006, Toyota’s North American facilities reduced energy use per vehicle by 7 percent while increasing production by 4 percent. ✓ Toyota used methods such as energy treasure hunts and kaizen events to achieve these results (Chapter 3 has more information on these methods).

(^3) National Association of Manufacturers (NAM), Energy Efficiency, Water and Waste-Reduction Guidebook for Manufacturers: Proven Ways to Reduce Your Costs and Improve Operations. www.nam.org/s_nam/bin.asp?CID=202138&DID=233434&DOC=FI LE.PDF, (viewed September 2007), p. 5. (^4) Information in this box is from: Toyota North America, 2006 Environmental Report, November 2006, p. 26, available at www. toyota.com/about/environment/news/enviroreport.html.

6

Chapter 1: Introduction

There are four general steps involved in developing an energy planning and management roadmap appropriate to your organization, as follows.^5

1. Initial Assessment: Consider the opportunities, risks, and costs associated with strategic energy management.
2. Design Process: Understand your company’s energy needs and how to approach energy management at your company.
3. Evaluate Opportunities: Identify and prioritize energy-related improvement opportuni- ties, such as energy-effi ciency actions, energy-supply options, and energy-related products and services.
4. Implementation: Use a management system such as the ENERGY STAR Guidelines for Energy Management to implement energy opportunities.^6

Each of these steps is important for developing and implementing a strategy for Lean and energy improvements at your organization. Figure 2 presents a roadmap for energy planning and manage- ment that identifies potential connections to Lean methods and improvement techniques outlined in this toolkit.

(^5) Bennett, Charles J. and Whiting, Meredith Armstrong. “Business & Energy in the 21st Century, Navigating Energy Management: A Roadmap for Business.” The Conference Board Executive Action Series. No. 160. September 2005. (^6) The ENERGY STAR Guidelines for Energy Management are available at: www.energystar.gov/index.cfm?c=guidelines.guidelines_ index.

Chapter 1 Chapter 2 Chapter 3 Chapters 4 & 5

Select energy management approach: •Set goals and metrics •Decide scale •Allocate resources •Integrate with Lean and Six Sigma

Understand baseline and identify opportunities: •Energy assessments •Value stream mapping •Energy treasure hunts •Six Sigma

Step 1 Initial Assessment

Step 2 Design Process

Step 3 Evaluate Opportunities

Step 4 Implementation Understand the business opportunities related to strategic energy management: •Benefits •Costs •Risks

Implement with kaizen events

Energy efficiency: •Total productive maintenance •Right - sizing •Standard work •Plant layout Energy supply options Products and services

Lean and Energy Toolkit Connections

Lean and Energy Management Roadmap (Figure 2)

Source: Adapted from Bennett, Charles J. and Whiting, Meredith Armstrong. Business & Energy in the 21st Century, Navigating Energy Management: A Roadmap for Business, The Conference Board Executive Action Series, No. 160.

7

Chapter 1: Introduction

Chapters 1 and 2 of this toolkit support steps 1 and 2 of the roadmap, in that they can help your organization understand the relationship of Lean to energy use and the benefits of systematically reducing energy use through Lean. Chapters 3–5 of the toolkit describe how to identify and imple- ment energy savings opportunities in the context of Lean, supporting steps 3 and 4 of the roadmap. These strategies leverage Lean methods such as value stream mapping, kaizen events, total produc- tive maintenance, and standard work to improve energy and operational performance, while also incorporating energy assessment and reduction tools that can enhance Lean implementation.

Lean and energy management can work together to increase profit, enhance productivity, and de- crease energy consumption through sustained and continual improvements. This toolkit is designed to help your facility achieve these goals.

To Consider

• How well coordinated are Lean activities and energy-effi ciency efforts at your organization?
• Who makes decisions involving energy use at your facility or company?
• How are energy costs allocated at your company? Are costs billed to over- head accounts or are they assigned to individual departments or value streams?
• How could your company benefi t from improved Lean and energy management?

9

CHAPTER 2

Overview of Energy Use and Lean

This chapter provides background information on energy use and describes how Lean implementa- tion efforts can increase energy effi ciency.

Energy Sources and End Uses

In the manufacturing sector, the predominant energy sources are natural gas and electricity (a sec- ondary source, typically generated off-site by a utility using one or more primary energy sources or fuels). Manufacturers also use other energy sources, such as fuel oil, for producing heat and power on-site. Some facilities have on-site co-generation, where they combust a fuel (e.g., natural gas or wood scraps) to produce heat and electricity. Figure 3 lists major energy sources used by the indus- try and manufacturing sectors in the U.S. economy

Sources of Energy Used for U.S. Industry and Manufacturing, 2005 (Figure 3)

Source: U.S. Energy Information Administration, Annual Energy Review 2005, Washington, DC, July 2006. www.eia.doe.gov.

Aggregate, facility-level information on energy use (typically derived from monthly utility bills) only tells part of the story. Understanding the energy end uses—what work we use the energy to do—re- veals more useful information to identify opportunities for improving effi ciency and reducing costs. Box 5 lists several of the common end uses for energy in manufacturing. In an offi ce setting, end- uses primarily include heating, ventilating, and air conditioning (HVAC), lighting, and operation of appliances and computers.

Natural Gas

36% 33%

17% 7% (^) 2% (^) 4% 1%

Other Sources Electricity Coal Fuel Oil Coke & Breeze

LPG (propane)

10

Chapter 2: Overview of Energy Use and Lean

Energy End Uses: What Do We Use Energy to Do? (Box 5)

✓ Heating, ventilating, and air conditioning (HVAC) ✓ Lighting ✓ Process equipment operation ✓ Process heating and cooling ✓ Transportation

While identifying energy end uses is often straightforward, determining the amount of energy used by each end use can be challenging—but end use information is essential to targeting waste and improvement opportunities. In the context of Lean, it may even be useful to understand energy end use information at the process and equipment levels. Chapter 3 discusses some strategies and techniques for better understanding energy uses and costs at your facility.

Looking at energy end uses across the manufacturing sector in the U.S. economy provides an indica- tion of where effi ciency improvement opportunities may exist. Tapping into sector-specifi c resources can help companies identify additional areas of efficiency opportunity within their sector (see Ap- pendix B for information on sector-focused energy reduction resources).

Process heating accounts for 53 percent of direct energy end use at manufacturing facilities, while machine drives and motors account for another 22.1 percent, according to a recent study by NAM (see Table 1). Chapter 4 describes specifi c strategies for reducing the energy used by these and other types of processes.

Consider targeting your facility’s energy efficiency efforts on two key end uses that are likely to account for a significant portion of your facility’s energy use. As shown in Table 1, the following end uses typically have energy savings opportunities:

1. Process heat
2. Machine drives and motors

For facilities without these types of energy end uses, HVAC systems and lighting may be good end uses to target.